Here’s what’s happening now with mortgage rates after Trump's latest push on housing affordability

Core Viewpoint - President Trump is directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds to improve housing affordability, which is expected to lower mortgage rates and monthly payments for homebuyers [1]. Group 1: Impact on Mortgage Rates - The purchase of mortgage-backed securities (MBS) by Fannie Mae and Freddie Mac is anticipated to lower mortgage rates, with analysts predicting a reduction of 25 to 50 basis points [6]. - UBS analysts estimate that the $200 billion in MBS purchases could lead to a reduction of approximately 10 to 25 basis points, potentially bringing the current 30-year mortgage rate down to around 6.0% from 6.21% [7]. - Historical context shows that significant MBS purchases by the Federal Reserve during the COVID-19 pandemic led to a substantial decrease in mortgage rates, highlighting the effectiveness of such actions [3][4]. Group 2: Financial Implications for Homebuyers - A decrease in mortgage rates to around 5.9% could result in a monthly payment reduction of $118 for buyers of a median-priced home valued at approximately $425,000, which could significantly impact first-time buyers [8]. - Despite potential rate reductions, affordability remains a critical issue, as home prices have increased nearly 50% since pre-pandemic levels, making it challenging for buyers to qualify for loans even at lower rates [10][11]. Group 3: Market Reactions - Homebuilder stocks experienced a rally following the announcement, although builders were already implementing strategies to lower mortgage rates prior to this news [9]. - The psychological impact of the announcement may encourage potential buyers to re-enter the market, although overall affordability issues persist [10].